Colgate-Palmolive (NYSE: CL) reported strong Q1 results with revenues and earnings above street estimates. The company reported $5.1 billion in revenue and $0.86 adjusted earnings per share, compared to consensus estimates of $5.0 billion and $0.82, respectively. Despite these positive results, analysts believe that CL stock is fully valued at $93. In this article, we will discuss Colgate-Palmolive’s stock performance, key takeaways from its recent results, and its current valuation.
Colgate-Palmolive’s stock has seen a 10% increase from early January 2021 to around $95 now, compared to a 40% increase for the S&P 500 over the same period. However, the stock’s performance has been inconsistent, with returns of 0% in 2021, -8% in 2022, and 1% in 2023. In comparison, the S&P 500 had returns of 27% in 2021, -19% in 2022, and 24% in 2023, indicating that CL underperformed the index in 2021 and 2023. On the other hand, the Trefis High Quality Portfolio has outperformed the S&P 500 each year over the same period, suggesting that a group of stocks can provide better returns with less risk.
In the current uncertain macroeconomic environment with high oil prices and elevated interest rates, analysts are unsure whether Colgate-Palmolive will continue to underperform the S&P 500 or see a strong jump in the next 12 months. From a valuation perspective, the stock is considered to be appropriately priced at $93, with an estimated valuation of $91 per share based on a P/E multiple of over 26x and expected earnings of $3.43 per share for full year 2024. The company’s Q1 revenue of $5.1 billion was up 6% year-over-year, with strong growth in its Oral, Personal, and Home Care segment as well as its Pet Nutrition segment.
Looking ahead, Colgate-Palmolive expects its organic sales to rise between 5% and 7%, with adjusted earnings projected to increase in the mid-to-high single digits. The company reported sales of $19.5 billion and adjusted earnings per share of $3.23 in 2023, and is expected to continue navigating well in the near term. However, analysts believe that much of the positives are already priced into the stock, and investors looking to enter may want to wait for a dip to achieve stronger long-term gains. While CL stock appears fully valued, it is important to compare Colgate-Palmolive’s performance with that of its peers in the industry.
Overall, Colgate-Palmolive’s Q1 results exceeded expectations, with strong revenue growth and margin expansion leading to a significant increase in adjusted earnings per share. The company’s outlook for organic sales and earnings growth is positive, but analysts believe that the stock may be fully valued at its current price. Investors looking to enter may want to consider waiting for a dip to capitalize on potential long-term gains. Additionally, comparing Colgate-Palmolive’s performance with that of its peers can provide valuable insights for investors.
